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CREDITORS BEWARE! COLLECTIONS SUSPENDED BY CORONAVIRUS

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New Jersey’s Governor will likely sign today the “COVID-19 Financial Security for Consumers Act,” which concerns financial security relating to the Coronavirus disease pandemic and certain future financial security caused by medical debt and future declared emergencies. As used in the bill, “covered coronavirus period” means the period beginning with the Public Health Emergency and State of Emergency declared by the Governor in Executive Order 103 of 2020 and extending 120 days following the end of that public health emergency and state of emergency.

The bill would allow a person who has experienced financial hardship as a result of the pandemic to apply to major credit reporting agencies and any economic hardship resulting from the pandemic would not factor into the person’s credit score.

The bill also precludes creditors and debt collectors from pursuing any unpaid debts during the covered coronavirus period. In the case of a claim or proceeding that would otherwise be barred by the upcoming expiration of the statute of limitations, the bill does not prevent a creditor or debt collector from commencing an action or proceeding in court of against a debtor, provided that the creditor or debt collector includes in any process served on a debtor prominent language putting the debtor on notice that the debt cannot be collected until the conclusion of the covered coronavirus period.

Next, the bill gives patients six months after their first medical bill is sent out before health care offices and debt collectors can collect payment, and a year before that debt shows up on their credit report. After the one-year period has elapsed, a medical creditor or medical debt collector is required to give a consumer at least one additional bill before reporting a medical debt to a consumer reporting agency.

The bill also requires health insurance carriers to cover treatment for COVID-19. These requirements of the bill remain in effect during the Public Health Emergency and State of Emergency declared by the Governor in Executive Order 103. The bill requires the coverage to be provided to the same extent as for any other services under the health benefits plan, except that no cost-sharing may be imposed on the coverage provided pursuant to the bill. The bill takes effect immediately and applies to all health benefit plans currently in effect in the State.

This bill would also put on hold enforcement activities such as bank levies, wage garnishments, and other means for a judgment-creditor to collect monies owed. However, the Executive Order would not apply to any executions or other post-judgment process to enforce a Judgment or Order on a matter that was instituted in or transferred to the Family Court and then transferred to the Superior Court Law Division. The Executive Order precluding activities would apply to any Judgment or Order entered before, on, or after the day the Executive Order was issued, except as described above concerning Family Court matters.

Finally, Sheriffs, Special Civil Part Officers, and their agents would be required to refrain from acting on any newly issued execution or other post-judgment process that fell within the scope of the Executive Order. However, a Court of could determine on its own, that enforcement of such execution or other post-judgment is necessary “in the interest of justice.” If you have any questions, email Mike Farhi at [email protected].

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